By Yvonne Liu
High-profile commercial property king Pan Shiyi s flamboyant streak belies a more practical bent.
When the Sichuan earthquake struck last year, one might have assumed he would help the reconstruction effort by building new homes. The Soho China chairman instead built washrooms to provide another type of essential comfort for quake victims.
Mr Pan and his wife, Zhang Xin, are rarities in the mainland property market, where most developers keep a low profile to avoid unwanted attention from officialdom. The couple are well known and make regular appearances on television and in newspapers and magazines, where they give their views on everything from property to lifestyle and the arts.
Mr Pan also hosts an online chat room every week on his blog, where the topics are not limited to the property market but include aspects of his daily life.
When the new China Central Television Headquarters hotel complex in Beijing caught fire in early February, he took photos and posted them on his blog.
Mr Pan jokes that the media limelight he and his wife enjoy saves Soho China the high cost of advertising their projects.
But there is a more serious reason they like to see their names in the headlines.
"There is a lot of corruption on the mainland and if we stay in a black box, we can t fight it. If we come out and let the sun shine on us, the sunshine will be our best protection and those people will not leave their box to hit us," he explains.
Those remarks indicate the difficulties of becoming a successful private developer in an intensely competitive mainland property market.
The 46-year-old entrepreneur was born in a village in Gansu province and grew up from humble beginnings. He worked in the former Ministry of Petroleum after graduating from Beijing Petroleum Institute in 1982.
Mr Pan began his forays in the property market in the 1990s, lured by money speculators were making on Hainan Island s property market.
He set up a company which became Shanghai-listed Vantone Group, with six partners including Vantone chairman Feng Lun. In 1992, the company developed an office building in Beijing and generated an attractive profit from the sales.
That background helped him to set up Soho China with his wife in 1995. The firm is now China s biggest commercial property developer.
Unlike other mainland developers, Soho China focuses on commercial projects and is known for its creative architectural designs.
"I have only one instruction to the architects - be creative. I ask them to create innovative buildings that people have never seen before," he said.
The developer s world-renowned Commune by the Great Wall came about after he asked 12 Asian architects to design different serviced villas and suites. This project was hailed a "New Architectural Wonder of China" by Business Week.
Commune by the Great Wall made Soho China famous, but which development project is your favourite?
Chaoyangmen Soho. It is our latest development. I asked British architect Zaha Hadid to design a creative project, and he did. The project is unique, like the Beijing bird s nest [Beijing National Stadium]. The construction cost is 50 per cent higher than other projects we have built.
Which project don t you like?
Soho New Town. It was our first project and we didn t have much experience then. The development had many drawbacks such as insufficient sunlight to the inner rooms.
The Beijing and Shenzhen property markets have posted modest rebounds in the past few months. The decline in property prices in February was also narrower than in January. Do you think the worst of the downturn is over?
Property sales in Beijing and other cities increased significantly in February. I believe the increase in property sales is attributable to the cut in mortgage rates and stimulative policies of the local governments. But I don t know whether the worst for the property market has passed or not. It is difficult to reach that conclusion at this moment.
So, when will the mainland property market recover?
I don t know. Property prices keep going down. The global financial crisis will retard any recovery. In addition, plenty of budget housing will be released by the government in the second half of this year. Developers should not have any fantasies about the market outlook.
What policies should the government introduce to stimulate the property market?
The government has released appropriate stimulative policies already. I think the next step is to build up a secondary market. The property market will benefit if transactions in the secondary market are active.
Mainland insurance companies have received approval to invest in the property market. What impact will this have?
The policy is positive for the commercial property sector, as commercial premises could provide good yield and capital growth potential for insurance companies. Details of the policy will be available in October and I believe it will be tested in certain cities before being expanded to the national level. I believe the impact on the property market will be very limited this year.
Will Soho China be more aggressive in land acquisitions this year, especially with land and property prices on the mainland having dropped significantly since 2007?
We were in winter sleep last year, particularly after the Beijing Olympic Games. We have been conservative with our property investment since early last year, as we had been expecting that the market would get worse. We instead focused on property sales and leasing only. We will wake up this year. Land prices are close to the bottom. This is a golden time for us to acquire projects or sites.
You told the media two years ago that Soho China would not acquire development sites in Shanghai. Will Soho China expand in Shanghai or other mainland cities this year?
Yes, land prices in Beijing and Shanghai dropped 20 to 30 per cent last year. We plan to acquire development sites and uncompleted projects in prime locations in Shanghai and Beijing this year.
What is the biggest challenge for Soho China over the next few years?
Our biggest challenge is to decide how to market and sell the projects we build. We will keep focusing on brand-building and developing creative projects.
The mainland s unemployment rate has reached the highest level in three years. About 3 million young people who have graduated in previous years are still unemployed. More than 6 million university graduates enter the job market this year. Do you have any advice for them?
It s difficult to find a job these days. Graduates should lower their expectations on salaries. It s more important to gain experience and understand the operations of private firms.
What do you think of the mainland, Hong Kong and Taiwan?
The mainland and Hong Kong are two mirrors which can reflect the weaknesses and shortcomings of each other. I think the individual traveller scheme [to Hong Kong] should be extended to all mainland cities. Taiwan s economy has stagnated for 10 years. People shouldn t have had false hopes that the economy would recover immediately after the inauguration of Ma Ying-jeou [as the island s president] last year.
Why did you choose to build washrooms for students in Sichuan after the earthquake, while other developers built homes for the stricken residents?
It is very important for them. You can t imagine how terrible their environment was. But we found another problem after we built the washrooms. We had to educate the students on how to flush after using the washrooms. And they didn t use toilet paper. You can hardly imagine but they would use other things for cleaning.
You and your wife are so busy. Do you still have time to spare to play with your sons?
My wife and I seldom have business dinners and so we try to have dinner with our children every night. I think my problem is spending too much time with my sons.
